Outlook as long as the Auto Industry University of Michigan Auto Lunch Series Septemb

Outlook as long as the Auto Industry University of Michigan  Auto Lunch Series Septemb www.phwiki.com

Outlook as long as the Auto Industry University of Michigan Auto Lunch Series Septemb

Wilmer, Tom, Contributing Writer has reference to this Academic Journal, PHwiki organized this Journal Outlook as long as the Auto Industry University of Michigan Auto Lunch Series September 11, 2006 Auto Industry Leading Indicators Ability To Buy August ’05 August ‘06 Disposable Income Green Yellow Household Debt Green Yellow Yield Curve Green Red Inflation Green Red Composite Green Red Real Disposable Income % Change Year Over Year 6.6% – 4.2% 1.1% July Per Household

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Consumer Debt Payments Installment, Mortgage & Auto Leases % of Disposable Personal Income 15.4% 14.7%June The Yield Curve 10 Yr Minus 1 Yr Treasuries Percentage Points -15 -11 Oil Shock Oil Shock – 0.21% Aug -12 -19 -13 -14 -12 U.S. Federal Funds Target Percent 5.25 6.50 1.00

Consumer Prices All Items, Not Seasonally Adjusted % Change Yr/Yr 6.3% 4.1% July 14.8% Consumer Prices: Core Inflation 5.6% All Items Less Food & Energy, NSA % Change Yr/Yr 2.7% July 13.6% New Vehicle Consumer Prices % Change Year/Year + 0.4% July Monthly Data

Auto Industry Leading Indicators Willingness to Buy August ’05 August ‘06 Consumer Attitudes Green Yellow Unemployment Claims Green Green Workweek Yellow Green Stock Market Green Green Composite Green Green Consumer Attitudes Index 58.1 90.8 Aug 128.4 Average of U of M & Conference Board Source: University of Michigan & The Conference Board Buying Conditions as long as Vehicles Index 165 119 124 August 104 Bad Good 164 Source: University of Michigan During Next 12 Months

Buying Conditions as long as Houses During Next 12 Months Index 175 102 117 August 106 Bad Good 175 Source: University of Michigan Initial Unemployment Claims Thous in addition to s 501 674 268 287 315 497 4 Week Moving Average Manufacturing Workweek Includes Part-time & Overtime Hours 41.3 August 40.0 39.7

U. S. Productivity % Change Previous Quarter SAAR 9.6 Stock Market 11,257Aug Index Dow Jones Industrial Average U. S. Economic Growth % change 7.5% 6.4% 5.6% Quarterly SAAR Data 2.9%

The Effect of Gas Prices on Auto Sales U. S. Auto Industry Sales 2004 2005 YTD 2006 Total Industry 17.3 17.4 17.2 Light Vehicles, Million Units Oil Prices 2005 Dollars Per Barrel Oil Shock Oil Shock $ 73 August Real Nominal $94

OPEC Spare Capacity MMB/D PIRA Forecast Major Output Risks Iraq: 1.9 MMB/D Pipeline Sabotage Political Instability Saudi Arabia: 9.3 MMB/D Infrastructure Sabotage Venezuela: 2.6 MMB/D Post-Referendum Lack of Investment Lingering Strike Effects Russia: 9.3 MMB/D Yukos Affair Pipeline Sabotage Chechnya Nigeria: 2.3 MMB/D Labor Tensions Ethnic Tensions Weather Accidents Loading Delays Notional Spare Capacity 0.84 MMB/D Iran: 3.9 MMB/D Confrontation Over Nuclear Weapons Possible UN Sanctions 2006 Q2 Oil Inventories Millions of Barrels U.S. Excluding Strategic Reserve Units

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Oil Futures Speculation Crude Oil, Light Sweet Non-Commercial Long Positions of Contracts Current Oil Price Forecasts West Texas Intermediate, $/bbl July ’06 PIRA Global Insight Macro Advisors Energy In as long as mation Agency Average 2004 2005 2006 2007 Actual Forecast $ 41 $ 56 $ 70 72 71 69 $ 71 $ 67 76 74 69 $ 72 Gasoline Prices Cents Per Gallon (2005 $) Real Nominal $3.06 $1.13 $3.00 August Average All Types

Consumer Spending 6.3% July % of Disposable Income Energy Goods & Services Cost Per Mile Driven Cents Trucks Cars Importance of Fuel Economy in Vehicle Buying Decisions 2001 2002 2003 2004 2005 2006 22nd 19th 13th 11th 9th 4th Pre-Katrina/Rita Ranking

Conclusions Economic growth expectations as long as the second half of 2006 are as long as below trend at 2.5% due to a combination of the downturn in the housing market, the volatility in the oil markets in addition to high commodity prices. The Federal Reserve held the Fed Funds rate at 5.25% at its August meeting ending its tightening bias. The meeting minutes from the FOMC indicate that more hikes might be needed due to continuing concerns over consumer prices. The consensus remains as long as a hike to 5.5% by the end of the year. Consumer confidence lost ground overall in August, but showed some improvement toward the end of the month as gas prices in addition to inflation expectations fell. Home in addition to vehicle buying attitudes were at their lowest levels since 1990. The end of the peak driving season in addition to the lack of hurricane activity in the Gulf of Mexico have brought gasoline prices down by over 30 cents per gallon. Most analysts expect the drop to be limited; the hurricane season is only half over, strong world dem in addition to is still evident, in addition to geopolitical risks still remain. Auto industry sales will likely continue to move towards more fuel efficient vehicles. The shifts between segments will not be great, but consumers will shift within segments to more efficient entries. Overall industry sales are likely to be flat to down this year (with risks on the down side) in addition to down modestly in 2007 as the economy slows in addition to consumers feel the pinch of higher debt service costs in addition to falling housing prices, as well as continued expensive energy.

Wilmer, Tom Contributing Writer

Wilmer, Tom is from United States and they belong to Central Coast Magazine and they are from  Grover Beach, United States got related to this Particular Journal. and Wilmer, Tom deal with the subjects like Regional Interest

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